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Tuesday, June 30th, 2009

Michael Couldn’t Beat It ~ The King of Pop’s Deflated Finances

Jackson died this week while organizing a highly anticipated 50-night venue of shows at London's ‘02 Arena.

It’s been a long-awaited return for Michael Jackson, as this would be his first concert in 8 years.

Jackson's Curtain Call: The Comeback Concert that Will Never Be

Whether the concert series was Jackson’s intent on returning to the music which gave him his glory, or if it were more of a financial life vest to keep Jackson and his entourage afloat, it’s certain his return was celebrated by his fans across the world.

In the course of Michael Jackson’s life and career he sold hundreds of millions of records and played in sold out arenas around the globe.

Jackson was a pop icon who gave us memories to last a lifetime.

With all this fame certainly came a fortune, so it’s plausible to assume that Jackson should of collected one of the largest fortunes in the entertainment industry in recent memory.

Sadly, this is not the case.

Due to faulty management and representation, excessive personal spending and surmounting legal bills, it’s rumored that Michael Jackson was facing bankruptcy.

Bankruptcy is Blind

The news of such financial distress came as both a shock and comfort to those in similar peril.

To know that an iconic person such as Jackson could be faced with the probability of filing bankruptcy made many feel they were not alone.

It also served as further proof that bankruptcy is not biased nor prejudice, it crosses all socio and ethnic borders.

The financial predicament which Jackson found himself navigating through was mostly due to the fact that Jackson’s camp continued to spend tens of millions of dollars a year even while his musical creation had been limited to his latest album in 2001.

In plain terms, his income did not meet his expenses, which is so often crisis which leads many into the bankruptcy fold.

To compound the issue, Jackson was faced with having to render himself to typical acts of desperation, which many do when in a similar situation, Jackson financed these personal debts by borrowing against assets and by some estimates his total borrowings at his death may have exceeded $500 million.

The iconic nature of Michael Jackson was not enough to ward off financial ruin.

As many others throughout the country are facing financial distress and the prospect of bankruptcy, there might be comfort in knowing the same man who will forever be known as the King of Pop, the creator of the ‘moon walk’ and owner of Never-Never Land was in the path of bankruptcy.

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Saturday, June 27th, 2009

Michael Jackson, Neverland Ranch and Foreclosure

When ambulances were called to Michael Jackson's home last Thursday, they went to the Beverly Hills mansion he had been renting.

Jackson's most famous residence, the lavish, one-of-a-kind, amusement park-like Neverland Ranch, hadn't been his home for many years.

Jackson purchased the property in 1987 for almost $20 million. At the time, it was a working ranch, but under Jackson's care it would become a shrine to the childhood Jackson never had. From nineMSN:

The singer spent $35 million improving the property, which featured two railway lines, two helicopter pads, its own fire department, a zoo and a plethora of amusement part-style rides. The property cost an estimated $10 million a year to maintain.

Jackson lived at the ranch for many years, and underprivledged and sick children from California and across the country came to visit his theme-park.

But all the while Jackson was very private about the property. Visitors weren't allowed to take pictures inside, and they were required to sign confidentiality agreements upon arrival.

Perhaps the most intimate view of the property came from a lengthy 20/20 report that highlighted some of the property's extraordinary features.

Foreclosure on Neverland Ranch?

But the joy of Neverland Ranch, named after the magical land in "Peter Pan" were children never grew up, wouldn't last.

Jackson had an almost $25 million loan out on the house. In 2007, he was $23 million delinquent on the loan and foreclosure proceedings began.

In California, after you miss three mortgage payments in a row you have 90 days to make a payment. Jackson, who hadn't released an album since 2001, was unable to make a payment.

For most people, this would have been the end of the line. For most people facing imminent foreclosure, filing bankruptcy is the best option for protecting their home. Of course, Michael Jackson isn't most people.

Jackson's celebrity helped stop foreclosure. His debt was transferred to another loan company, and the property stayed with him.

However, Jackson continued to have money problems. The zoo and many of the amusement park rides were auctioned off. With money problems and child molestation charges - stemming from a child's visit to the ranch - Jackson said he could no longer feel at home there.

And then the man who had already spent so many nights in hotels across the world while on tour, began living elsewhere.

At the time of his death Neverland Ranch was still in Jackson's possession. Today, the property is valued somewhere between $90-120 million. With his death, the property may be worth even more.

But with Jackson's debts rumored to be near $500 million, the property could be auctioned off to pay his creditors. Others, however, say that the property may become a museum similar to Elvis Presley's Graceland.

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Posted in Home Foreclosure | 3 Comments »

Friday, June 26th, 2009

Michael Jackson Lived Like a King, Died Nose-Deep in Debt

Michael Jackson’s death has shocked the world.

If we were too young to remember him belting out top hits as a round-faced child, we probably have vivid memories of him monster-dancing on MTV or dangling his kid over a Berlin balcony.

And as the globe starts to process his death, we take a look at the entertainer’s troubled fiscal life.

Michael Jackson’s Wild Spending Habits

Jackson left this world with his checkbooks in disarray.

There was hope that his upcoming, sold-out 50 show London tour would sweep him out of the red, but that hope shattered yesterday when he died in an LA hospital after a cardiac arrest that was rumored to stem from a Demerol injection.

The King of Pop died with as much as $500 million in debt, according to sources recently cited in the Wall Street Journal.

When you look at some of his wild purchases, it’s not hard to understand how his debt got so out of control.

Some of the items he bought included:

  • a Ferris wheel and the rest of the infamous Neverland playground
  • a bronze sculpture of an Indian
  • an arcade collection
  • a personal ice cream cart
  • a life-sized Lego model of Darth Vader
  • a 1989 Rolls Royce limo with 24-karat gold trim
  • a statue of E.T.
  • a zoo (remember Bubbles Jackson?)

And that’s just a fraction of his possessions.

When Jackson was on trial in 2005 for child molestation charges, a forensic accountant testified that Jackson was spending $20-$30 million every year. (Jackson was later acquitted of all criminal charges.)

But Jackson’s money problems go well beyond shopping sprees.

Michael Jackson's Legal Problems Contribute to Debt

Years before the criminal trial, Jackson settled a civil lawsuit for $22 million with a boy’s family who alleged Jackson sexually assaulted the child.

Jackson and his reps denied any wrongdoing and said he was settling to “move on”.

As recently as last year, Jackson was sued by the son of the King of Bahrain who said he owed him $7 million.

Jackson argued that he thought the sheik had given him gifts, but the sheik said he had actually invested in a songwriting business with the pop legend.

Jackson ended up settling with him for an undisclosed amount.

Lawsuits, settlements and frantic shopping sprees add up quickly.

So, the question left to answer is what happens to all of his debt now he’d dead?

Debt After Death—Is Jackson’s Family Responsible?

Typically, family members are not responsible for the debts of a deceased love one; however, there are exceptions.

Read on for information on how Jackson’s debts could fall to people close to him.

Repossession and Foreclosure After Death

Contrary to popular belief, in many cases, loans are not automatically dismissed just because the debtor dies.

Secured debt (debt tied to a property, such as a home or car loan) can still be repossessed by the bank to cover the balance of an unpaid loan.

That means a dead person can lose their home or car even after they’ve been laid to rest.

If another person’s name is on the loan, they would likely be responsible for the debt.

So, for example, if Lisa Marie Presley (Jackson’s former wife) signed on a mansion with him, she could likely be responsible for that debt.

Credit Card Debt After Death

If any person held joint credit cards or lines of credit with Jackson, it’s probable they would be responsible for paying the remaining debt.

Keep in mind, if a person is an “authorized user” on a credit card, (which is different than a co-applicant or joint account holder), then they typically don’t have to pay.

But there’s a twist—under certain circumstances, an authorized user may still be liable for those debts because the balances on those accounts may become the responsibility of the estate.

Did Jackson Have Co-Signers?

If someone was a co-signer on a loan Michael Jackson took out, he or she may very well be responsible for that debt.

Co-signers often get the short stick.

In fact, co-signers are usually even responsible for debt if the original debtor files bankruptcy (except in most cases of Chapter 13 bankruptcy).

Michael’s Debt Didn’t Define Him

As fans wander through the stages of mourning, a strong feeling emerges—Michael Jackson can’t not easily be defined, nor should he be.

He, like us, is a multifaceted, complex human being.

Being on the brink of filing bankruptcy doesn’t define you.

Yes, he was a debtor and a shopaholic, but he also was the King of Pop, a father, a son, a brother, an artist, a philanthropist and a friend to many.

Our hearts go out to his family.

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Posted in Bankruptcy News and Events | 3 Comments »